How Newark City Hall and its first major pro sports team fell out of love over and over

File photosNewark Mayor Cory Booker lashed out at Devils managing partner Jeff Vanderbeek on April 4, accusing him of exploiting the city, but many of the facts he cites are misleading or disingenuous.

NEWARK — It was October 2006. A beaming Cory Booker stood in the City Hall rotunda to announce he had persuaded the Devils to refashion the lease deal they signed with his predecessor, former mayor Sharpe James. Newark stood to gain millions of dollars for years to come.

"Starting on Monday, when we sign this agreement, I can say for the first time ever that
I am a Devils fan," Booker said.

But his stint as a Devils fan was a brief one. Within days, the deal collapsed, nixed by Newark Housing Authority Director Keith Kinard, who, as arena developer, thought the city incurred too much risk.

It would prove an expensive missed chance. But hardly the last.

In the weeks since a panel of arbitrators ruled largely with the Devils in their long dispute with the city, The Star-Ledger reviewed hundreds of pages of documents, e-mails and text messages to try to determine what went so wrong between the Devils and the city. The paper’s investigation showed there was bad communication, mistrust and sheer stubbornness on both sides, but it also found that the city had a chance to cut a better deal than it ended up with on at least five occasions.

After the 2006 deal came two missed chances in 2009, then another in 2010 and again in 2011. Each time, the mayor, the housing authority and the team would agree, and someone would balk.

"For me (it) has been a painful, difficult, frustrating if not enraging five-year odyssey to try to bring the city some semblance of justice from (Devils owner) Jeff Vanderbeek," Booker said the day after the ruling came down.

But the newspaper’s review shows many of Booker’s post-arbitration statements are at odds with the facts and blame for failed deals belongs as much with the mayor as anyone. Now, the city is left not only owing $600,000 to the Devils, but according to records recently obtained by The Star-Ledger, taxpayers are on the hook for $3.7 million in legal and consulting fees.

"In none of the (deals) was there going to be a check cut from the city or the NHA to the Devils," Vanderbeek said. "The numbers are overwhelming that (those deals) would have been better for them."
HOW IT ALL BEGAN

From Day One, it was complicated.

In October 2005, the city and housing authority put up $210 million to build a world-class arena that would serve as the home of the Devils. The team, run by Vanderbeek, put up an initial $100 million and would be responsible for building and running the venue. The barely completed arena opened in October 2007.

When roughly $2.8 million in rent came due a year later, the Devils said delays in permits, street repairs and utility work had cost them dearly. They would offset the rent against those damages as well as $2.7 million a year in unpaid parking revenue owed the team by the city.

Aside from $346,000 in job training and youth development money, the Devils paid nothing to Newark for years, according to the arbitration ruling.

Since taking office in 2006, Booker, a longtime critic of the deal signed by James, vowed he could do better.

FIRST CHANCE, 2006

Even as Booker was proudly announcing his deal with the Devils, it was a dead duck.

Looking back on the 2006 effort, Vanderbeek said all seemed well at first.

The Devils agreed the city would get $4.5 million for community programs, above what the lease called for, along with a plot of land on Broad Street the Devils estimated was worth upward of $3 million.

The way we were: Newark Mayor Cory Booker's past praise for New Devils managementWhen Newark Mayor Cory Booker recently lashed out at New Jersey Devils owner Jeff Vanderbeek, it wasn't just a scathing verbal attack. It was a dramatic reversal of much of the high praise Booker himself had publicly piled on Vanderbeek and the Devils organization over the past few years. This video montage includes three public appearances during which Booker praised the team and its owner.

But, as it turned out, Booker announced the deal without housing authority approval, officials said. Since the authority advanced the city its $210 million investment through a bond sale, Kinard had to sign off on any potential agreement.

Kinard said he balked because the concessions would have left the city and the housing authority on the hook for costly infrastructure work that was previously the Devils’ responsibility.

"For the 4,500 free tickets that the city would have gotten and a little bit of land, the city and the housing authority would have been responsible for $50 to $60 million worth of infrastructure improvements," Kinard said.

"This was a complicated transaction that needed to satisfy more than just the Devils and the city," said city hall spokeswoman Anne Torres.

Vanderbeek said Booker’s loose grasp of detail and penchant for exaggeration was a frustrating theme throughout years of near-miss negotiations.

"He spent neither the time nor the energy to have a command of the facts," Vanderbeek said.

"This is another petty attack by Jeff Vanderbeek on the mayor as he tries to distract from the facts," Torres said. "The mayor began studying the arena deal before he entered office and had a firm grasp of the details."

Booker did not answer specific questions for this story, leaving his responses in the hands of staffers.

SECOND CHANCE, 2009

Seton Hall Law School dean Patrick Hobbs took a swing at it in 2009, convening negotiations anew by hosting Vanderbeek and Kinard at his Basking Ridge home — an effort that produced a working agreement, according to an e-mail sent in May 2009 from Hobbs to all the key players.

The Devils would pay $5.2 million in rent and forgive about $3 million in damages from blown construction deadlines. The city would pay the Devils $4.5 million in unpaid parking revenue.

It looked as if a detente had come.

"Thanks again for everyone’s hard work on this," Hobbs wrote to Vanderbeek and Kinard in an e-mail on May 4. "I believe we have the basis for a fair and equitable solution to all the issues surrounding the Arena."

One obstacle remained: parking. It would be up to Booker, officials said, to score a better parking deal with local lot owners and split proceeds with the Devils.

Kinard said the deal was so close — and so far.

"We could not agree with that elephant (parking) sitting in the room," Kinard said

Without parking, the city could net only about $700,000 from the new deal, according to the Hobbs e-mail.

THIRD CHANCE, 2009

Later that year, Jerold Zaro, former Gov. Jon Corzine’s chief officer of economic growth, took on the role of peacemaker. But this time the city and the team were divided on how to split ticket taxes.

Video: New Jersey Devils Owner Jeff Vanderbeek's response to Mayor Cory Booker's tiradeA week after Newark Mayor Cory Booker called him a "high falutin' huckster and hustler" and "bamboozler", New Jersey Devils owner Jeff Vanderbeek meets with The Star-Ledger editorial board to explain his side of the bitter feud. Vanderbeek says the facts are on his side in the long-running rent dispute with the city, speculates whether Booker's attacks are a political ploy to boost his popularity with voters and says the dispute has him regretting ever moving the team to Newark.

A memo dated Oct. 30 laid out the groundwork. The Devils had to agree to ticket taxes levied by the city, so they demanded a cut in exchange for raising their prices.

But the Devils would agree to a tax only if the New Jersey Sports and Exposition Authority, Vanderbeek’s competition in the entertainment marketplace, also agreed to impose a tax, the memo said, evening the playing field for both venues.

No one was surprised when the NJSEA and The Rock couldn’t agree.
FOURTH CHANCE, 2010

The Zaro and Hobbs efforts did move the ball somewhat and would form a basis for Vanderbeek and Kinard to come to an arrangement on their own.

By February 2010, they exchanged congenial e-mails that laid out yet another final arrangement.

Ticket taxes would be split 50/50. A cut of parking revenues would be split 50/50. The Devils would forgive $2 million in capital payments and would pay $4 million in back rent.

In an e-mail making the final tweaks, Vanderbeek wrote to Kinard, "Looking forward to putting this behind us and moving forward as partners."

The harmony did not last long.

Kinard now says that at the last minute Vanderbeek wanted a bigger cut of the ticket taxes.

Vanderbeek says it was the city and housing authority that reneged.

"The only reneging was Jeff reneged on the 50-50," Kinard said. The Devils deny the claim.

Aside from future proceeds from parking and ticket taxes, the city could have netted roughly $2 million, according to the exchanges between Kinard and Vanderbeek. Now the gloves were off.

In May 2010, Kinard dispatched a notice of dispute to the Devils, initiating the arbitration process. Another in a string of communication breakdowns occurred.

Booker has recently accused Vanderbeek of forcing the city into an expensive arbitration process. But records show it was the housing authority that kicked off the process.

At the time the notice was sent, the mayor was traveling out of state with a close political adviser and was apparently unaware of the housing authority’s move, according to a text message sent from the aide to Vanderbeek and reviewed by a reporter.

"It is an embarrassment to all of us," the aide texted to Vanderbeek. "NHA simply acted on its own. Zero excuse."

Vanderbeek asked that the aide remain anonymous as the text was a private message. Torres said the aide was not briefed on the housing authority decision and Booker was fully aware of the move at the time.

FINAL CHANCE, 2011

Throughout the six years of talks, Kinard, a respected negotiator credited with reforming the housing authority, was the point man for the city.

In a recent interview, he said he was often frustrated with what he called Vanderbeek’s broken promises and with the "atypical" scenario of the state’s biggest housing authority acting as an arena landlord.

"I have an authority to run," Kinard has often said, recently adding,"If I had my druthers, I’d have nothing to do with this."

Still, the parties decided to make one last stab at it. While lawyers and stakeholders were testifying in front of arbitrators last year, Vanderbeek and Kinard tried again.

Now the Devils were offering to help the city collect on parking.

"They asked for us to take part in the enforcement," Vanderbeek said, citing video technology that counts cars coming into the arena zone. "We agreed to split costs with them on special technology."

The final deal called again for a 50-50 split on ticket taxes, Kinard and Vanderbeek said. But Kinard said the Devils demanded a guaranteed base payment. That meant the Devils would get a fixed dollar amount of about $2.5 million, even if the city took in nothing. Kinard said he couldn’t agree.

The deal was abandoned and left in the hands of arbitrators.

After hearing weeks of testimony, and examining thousands of pages of documents, the panel ruled that the Devils pay Newark and the housing authority roughly $14.7 million in back rent, relocation expenses and fines. But they said the city must pay the Devils $15.3 million in unpaid parking, capital costs and taxes.

The mayor responded to the ruling with a public tirade that laid blame for the ruling solely at Vanderbeek’s feet.

"He’s trying to bilk us at every turn," Booker said, calling the former Lehman Brothers executive "a pathetic penny pincher" and "a Wall Street millionaire that plays into every stereotype that’s put out there."

Not only did the diatribe shake Newark’s business community, but in recounting Vanderbeek’s alleged transgressions, Booker erred on a few key facts, according to legal documents.

His assertion that Vanderbeek cost the city "millions of dollars in legal fees" seems disingenuous since housing authority documents show that of the $3.7 million the city paid in legal and consulting fees, $1.9 million was for arbitration, which was initiated by Kinard.

City Hall said the fees were a necessary expense as the Devils had refused to pay rent for four years.

Booker also mischaracterized a 2010 court ruling over parking, a major source of contention from the outset years ago.

"We have an arbitrators’ ruling that’s contradictory to a Superior Court ruling," Booker said in his April 4 tirade. But nothing in the arbitration appears to contradict the ruling Booker referenced.

Ed Murray/The Star-LedgerNewark Mayor Cory Booker walks back to his office through waiting Devils fans after speaking to media outside the Prudential Center about an arbitrator's ruling against the city on April 4.

The arbitrators upheld elements of a side agreement, known as "the parking letter," which mandates the city pay the Devils $2.7 million annually in parking proceeds throughout the 30-year lease.

Because it was not approved by the city council or housing authority board of commissioners, Booker said the letter was not binding, echoing a ruling by Superior Court Judge Patricia Costello.

"The parking letter simply is not an enforceable contract," Costello wrote in her judgment. What Booker left out is that she also ruled the "proper venue for the parking revenue issue is in arbitration."

Arbitrators upheld the $2.7 million annual payment, saying it satisfied obligations in the original lease deal agreed to by the council and the housing authority — obligations the city never met.

While Booker said Vanderbeek "bamboozled" the city, arbitrators accused city leaders of some bamboozling, themselves.

"The record exposed a persistent pattern of oral and written assurances by City and NHA officials to the Devils that they would share in parking revenues," the panel stated. In failing to come through, arbitrators said Newark’s only defense was that "the Devils should not have relied on these (supposedly ambiguous or conditional) commitments."

Booker accused Vanderbeek of using "every scurrilous legal tactic available to him," but arbitrators chided the city for questionable legal tactics as well. Then-corporation counsel Julien Neals testified in court that Newark would participate in arbitration. The city did not, leaving it instead solely to the NHA.

"The City’s renunciation of the Parking Letter, and its failure to participate in this arbitration, is part of a coordinated strategy with the NHA to frustrate commitments made to the Devils by the prior administration," the arbitrators ruled.

Now, with the arbitrators’ ruling, the city is out $4.3 million.

The Star-Ledger’s review shows that on several occasions the city might have made out much better than it did in the end. But the records paint a misbegotten process, bad communication, mistrust, the need to emerge the winner and a complex mix of issues.

But this long struggle may not be over.

Officials on both sides say they are talking about going back to the table.

The topic: ticket taxes and parking.
Editor's note: An earlier version of this article incorrectly stated that Pat Hobbs was the former dean of Seton Hall Law School. Hobbs is still the dean.